1. A partial partition as to property took place on March 17, 1968, in a HUF consisting of M. L. Ramachandra Setty and his six sons-M. R. Shashikumar, M. R. Gurumurthy, M. R. Nagaraj, M. R. Krishna Kumar, M. R. Shivaram and M. R. Jayshankar. The said partial partition was recorded in an agreement dated March 17, 1968, which contained a declaration made by Ramachandra Setty and his sons (the last son, M. R. Jayashankar being a minor, was represented by his father) that they would hold three estates with effect from that date as tenants-in-common in equal shares and they would cease to be properties of the joint family. The family continued to be undivided for other purposes. On March 31, 1970, there was a record made in the books of the HUF that in regard to the said estates there had been a partition and the corresponding capital had been divided amongst the members. On March 30, 1973, a formal partition deed was drawn up and registered. After the declaration made on March 17, 1968, Shashikumar, one of the sons of M. L. Ramachandra Setty, died leaving his wife, Kasturi Bai, and his children. During the assessment years 1970-71, 1971-72 and 1972-73 M. L. Ramachandra Setty and Kasturi Bai, widow of Shashikumar and five other sons of M. L. Ramachandra Setty, filed returns under the W.T. Act, 1957 (hereinafter referred to as the Act), stating that in respect of the estates in question they should be assessed as tenants-in-common having one-seventh share each and not as members of HUF. The WTO while accepting that they were holding the estates in question as tenants-in-common, each of them having one-seventh share in them, assessed them on the basis that they constituted an association of persons. Consequently, he rejected their prayer that each one of them was entitled to an exemption of Rs. 1,50,000 under s. 5(1)(iva) of the Act. The WTO, however, excluded the value of the said estates from the assessments made in respect of the HUF for the assessment years in question.
2. In the appeals filed by the individuals against the orders of the WTO declining to grant exemption under s. 5(1)(iva) of the Act in the case of each of them, the AAC held that the estates in question should be deemed to belong to the HUF and not to the individuals concerned until the division of the estates took place by metes and bounds. He, therefore, declined to give relief to the extent of Rs. 1,50,000 under s. 5(1)(iva) of the Act in the hands of each of the assessees. After the AAC disposed of the appeals, the CWT revised under s. 25(2) of the Act the orders of assessment passed by the WTO in the case of the HUF and directed the inclusion of the value of the estates in question in the wealth of the HUF in the assessment orders relating to the three years in question. M. L. Ramachandra Setty filed appeals before the Tribunal against the orders passed by the AAC. The HUF filed appeals before the Tribunal against the orders passed under s. 25(2) of the Act by the Commissioner.
3. The Tribunal held that the estates in question were held by the assessees as tenants-in-common and they did not belong to the HUF on any of the three valuation dates in question by virtue of the agreement dated March 17, 1968, which brought about a partial partition. Hence, their value could not be included in the wealth of the HUF, but one-seventh of their value should be included in the wealth of each of the seven tenants-in-common. It also held that each of the tenants-in-common was entitled to the benefit of exemption of Rs. 1,50,000 under s. 5(1)(iva) of the Act. Accordingly all the appeals were allowed. Thereafter, at the instance of the CWT, the above references have been made by the Tribunal under s. 27(1) of the Act. T.R.C. Nos. 158 to 160 of 1977, which arise out of assessment proceedings of the years 1970-71, 1971-72 and 1972-73, relate to the HUF and T.R.C. Nos. 155 to 157 of 1977, which arise out of the assessment proceedings of the years 1970-71, 1971-72 and 1972-73, relate to M. L. Ramachandra Setty.
4. In the cases relating to the HUF, the following three question are referred :
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the properties comprising the three estates did not belong to the HUF on the valuation date, though the properties were not divided in definite portions in spite of the fact that the properties were capable of physical division
(2) Whether the Tribunal was right in law in holding that it was not necessary to divide the property by metes and bounds for a partial partition
(3) Whether the Tribunal was right in law in holding that s. 20 of the W.T. Act does not apply to cases of partial partition ?'
5. In the cases relating to M. L. Ramachandra Setty the following questions have been referred :
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee owned 1/7th share in the three estates on the valuation date
(2) If the answer to question No. (1) is in the affirmative, then whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee is entitled to a deduction of Rs. 1,50,000 under s. 5(1)(iva) of the W.T. Act, 1957, in respect of the assets held by the HUF in which the assessee is a co-owner ?'
6. It is appropriate to take up for consideration the questions referred to us in relation to the HUF first.
7. The contention of the department is that in the absence of an order made under s. 20 of the Act the properties belonging to the HUF should continue to be treated as the properties of the HUF notwithstanding that some of them have been by agreement made the subject-matter of a partial partition and the coparceners have agreed to hold them as tenants-in-common.
Section 20 of the Act reads as follows :
'20. (1) Assessment after partition of a Hindu undivided family. -Where, at the time of making an assessment, it is brought to the notice of the Wealth-tax Officer that a partition has taken place among the members of a Hindu undivided family, and the Wealth-tax Office, after inquiry, is satisfied that the joint family property has been partitioned as a whole among the various members or groups of members in definite portions, he shall record an order to that effect and shall make assessments on the net wealth of the undivided family as such for the assessment year or years, including the year relevant to the previous year in which the partition has taken place, if the partition has taken place on the last day of the previous year and each member or group of members shall be liable jointly and severally for the tax assessed on the net wealth of the joint family as such.
(2) Where the Wealth-tax Officer is not so satisfied, he may, by order, declare that such family shall be deemed for the purposes of this Act to continue to be a Hindu undivided family liable to be assessed as such.'
8. It is relevant to mention here that the language of s. 20 of the Act is more or less similar to the language of s. 25A of the Indian I.T. Act, 1922, which did not specifically deal with cases of partial partition as it has been done under s. 171 of the I.T. Act, 1961. In a case which arose under the Indian I.T. Act, 1922, in Sir Sundar Singh Majithia v. CIT  10 ITR 457, the Judicial Committee of the Privy Council, while construing s. 25A of that Act, held that s. 25A did not prohibit members of a HUF from entering into a partnership in respect of a portion of the joint property if they had partitioned amongst themselves and that that section had no reference at all to a case of HUF which had parted with an item of property to its individual member taking proper steps and continued in existence at the time of assessment, never having been disrupted. Where some of the members of the HUF had agreed to hold a property which belonged to a joint Hindu family as tenants-in-common with effect from any particular date, it was held that such a case fell outside the scope of subs-s. (3) of s. 25A of the Indian I.T. Act, 1922.
9. In the cases before us, the members of the HUF, while they continued to be undivided in respect of the rest of their estate, agreed to hold the three estates in question as tenants-in-common with effect from March 17, 1968. The agreement dated March 17, 1968, had the effect of bringing about a partial partition amongst the members of the HUF in so far as the three estates were concerned. Because the family continued to be joint for other purposes, in view of the decision of the Privy Council referred to above, no order under s. 20 of the Act was necessary and in fact s. 20 was not attracted at all. S. 20 applies to a case where the 'joint family property has been partitioned as a whole among the various members or groups of members in definite portions'. The expression 'partitioned as a whole' means that a partition has taken place in its entirety in respect of all the property of the family. S. 20 cannot, therefore, apply to a case of partial partition as to property. The High Court of Allahabad has also taken the same view in Dwarka Nath v. CWT : 62ITR304(All) . The authorities under the W.T. Act, had, therefore, to decide these cases without any regard to s. 20 of the Act, but with due regard to Mitakshara law. It is well settled that it is open to the members of a HUF to agree to enter into a partial partition and to hold the properties which were the subject-matter of such partial partition, as tenants-in-common, while continuing to be joint in respect of other properties of the family. The Tribunal was, therefore, right in holding that s. 20 of the Act did not apply to cases of partial partition as to property, that the properties in question did not belong to the HUF on the valuation dates and further that it was not necessary to divide the estates by metes and bounds. The three questions referred to us in T.R.C. Nos. 158 to 160 of 1977 are answered in the affirmative and in favour of the assessee-HUF.
10. In view of the above answers, the first question which is common to T.R.C. No. 155 to 157 of 1977 is answered in the affirmative.
11. Question No. 2 in T.R.C. Nos. 155 to 157 of 1977 is governed by the answers given by us to the question referred to us in CWT v. Purushotham Pai : 114ITR270(KAR) and CWT v. Mrs. Christine Cardoza : 114ITR532(KAR) . For the reasons given in those decisions, we answer the second question in the affirmative and in favour of the assessee, M. L. Ramachandra Setty.